Capitalist Corner

April 22, 2005

Health of Nations: Japan

It's Friday, I've got to run to the airport in an hour, and the shower beckons (actually, demands). But before all that -- Japan! Also, in response to popular demand, I've grouped the series into a separate "Health of Nations" category. Collect all five!

Da Basics: Japan's health insurance is another one of these employer-based systems, and has been since 1922. Universal insurance was achieved in 1961, through the National Health Insurance Act. Employers with 700+ employees are required to operate insurance plans for workers and their dependents. The plans are called "society-managed insurance". About 1800 of these employer-run plans exist, with 85% of them being single company programs and the balance being jointly administered by two or more companies. The boards of these plans are 50% company reps and 50% worker reps, much like in Germany. Dependents are required to enroll in the plans and the whole thing is funded through payroll taxes. These employer-based, "society-managed insurance" groups cover 26% of Japan's population.

Employees and dependents in companies with fewer than 700 workers are automatically enrolled in the small business national health plan operated by the government. This plan covers about 30% of Japan and is paid for by both payroll taxes and general fund revenue.

The third category of insurance is the "citizens insurance program", which covers the retired and the self-employed. The plan is administered by municipal governments who levy a compulsory premium on the self-employed in their districts. Further, the employer run health care and the government run small business system are both required to contribute to the citizens program in order to cover the retirees. The contributions from the other two programs cover about 40% of the citizens insurance program costs. Any further amount needed comes from general revenue.

A variety of small insurance programs exist to mop up the folks between the cracks, government workers and various other special occupations use them. The unemployed remain in their employer's program (or whichever program they were in before) with the payroll contribution waived. All plans are required to cover a range of benefits, which include dental care, maternity care, and prescription drugs.

The plans place no restriction on hospital or physician choice and have no preauthorization requirements, i.e, no gatekeepers (save in certain, rare cases). Japan has a much more independent class of physicians, with most clinics and small hospitals being family-owned and operated by independent doctors -- a far cry from our non-profit and private-based care. The government builds and operates the large medical centers, though the distinctions are size rather than care. Small clinics can have hospital beds and multiday care, the distinction between clinic to hospital is simply having 20+ beds.

Hospital stays are longer in Japan but surgery is only 1/3rd as prevalent, mostly owing to a resistance towards invasive procedures. Nevertheless, patients stick around longer -- an average of 33 days in the hospital -- and are allowed to convalesce there.

Payment for both hospitals and clinics is done on a fee-for-service basis. Government regulates the fees, as well as prescription prices, with the help of the Central Social Insurance Medical Council. In Japan, primary care services are often more expensive than specialized care services, an inversion of most countries. Physician visits are often brief, but the Japanese hit the doctor's office 2.5 times more often than do Americans, Canadians, Germans or the English.

Cost Control: Like in the UK, Japanese health care is cheap, clocking in at a mere 7.6% of GDP. Put another way, Japan spends a bit less than $2,000 per capita on health care, America spends more than $5,000 despite not covering 43 million of its citizens. Problems are cropping up, however. Japan's got one of the most long-lived populations in the world, in addition to a quickly-dropping birth rate. By 2020, the proportion of Japanese of 65 should be about 26%, up from 10% in 1986. That's trouble. Americans, by contrast, are only supposed to see a 4% increase in codgers during the same time period.

To stem riding costs, Japan raised their copay from 10% to 20%, though the elderly were exempted from copaying for prescription drugs. Copays, however, are ineffective at limiting costs, they were capped at $500 a month, and so they did nothing to help on the costs -- mainly due to catastrophic illness -- that're hurting the system. So Japan is cheap, but having cost problems.

How Do We Stack Up? Japan is 8-11 (three way tie) on fairness of cost distribution and #1(!) on attainment of health care goals. Their system's performance, overall, puts them at #10. America, to compare, is 54th in fairness(!), 15th in goal attainment, and 37th in overall performance. All that and we only have to spend a bit over twice as much to get it! What a deal!

And that just about brings this little series to an end. On Monday, I'll have some longer thoughts for you on what this says about American health care and what I think we should be fighting for, so stay tuned for that. If you ever want to refer to these posts again, they're all grouped under the "Health of Nations" category, which you can access on the sidebar. Hope you liked.

» Great series of posts by Ezra Klein from INN,RNC: Idealistic not naive, realistic not cynical
Among other things this is the continuation of this post on reviewing economical blogs of interest.
Almost at random I chose the blog Corner Solution to be the next one [Read More]

Tracked on Apr 24, 2005 8:00:56 PM

Comments

Thanks for putting this all together in an easily digestible format! I can't imagine the number of hours that went into this. You're a brave man, Ezra.

Posted by: amici | Apr 22, 2005 7:52:20 PM

This was a great series Ezra. Thanks for all the hard work. It's pretty sad to realize that for all the money we in the US pay for health care, we are still getting a raw deal compared to most of the world.

Posted by: moonshower | Apr 22, 2005 9:25:13 PM

Wonderful work, Ezra. Thank you.

Posted by: jnfr | Apr 22, 2005 10:03:38 PM

Excellent, excellent series. Thank you so much for all the research and synthesis. I can't say I'm surprised that we're so sucky by comparison, but it's nice to have the actual figures.

Wow, this is indeed a most wonderful series, and how telling that it is not more commonly available information.

When tilting with rightwing debators, there is always a lot of heat over the wait times, the injustice to underpaid docs, the mythical canucks fleeing here for care, but no response to the fact that we pay way more per person here--and we are not all covered.

Do we have the per capita numbers for just those US residents *covered*? Or am I misunderstanding and those are the numbers we have? Seems to me the spending/care--coverage proportion would be even more grotesque if we saw how much is being spent on just those covered.

Posted by: JS | Apr 23, 2005 9:52:41 AM

No Nordic countries?

A modified Canadian financing system seems like the best one. (Allow people to upgrade to private rooms if they want.) There are other policy solutions that could be implemented without regard to the financing so long as the system is universal.

Posted by: Abby | Apr 23, 2005 7:46:24 PM

So what happened to Australia? (It was originally slated for Thursday.)
Created in 1975 as MediBank, been tinkered & bent & twisted a bit
since, but currently
Govt. pays 85% (more or less) of "scheduled fee" for most services,
with little or (often) NO copayment from patient.
Govt subsidises most prescription drugs, with a small co payment from
the user.
Private Health Insurance covers Dental, physiotherapy, glasses, and
other odds & sods, in addition to covering private hospital access.
Public hospital access is 100% (again, more or less) Govt. funded.
Funding: nominally by a 1.5% "surcharge" on income tax, plus an extra
charge if tax payer has no private insurance. Govt pays 30% of the
cost of private health insurance.
Almost constant problems with waiting lists for "elective" surgery
in the public hospital system, and public hospitals always crying poor. (The fact that the federal government provides the money via
the state governments, often a govt of a different party means
lots of buck passing, no solutions.)
Government resistance to increases in the "scheduled fee" for things
like GP consults have resulted in many more GPs asking for copayments
in the recent past, and has made it difficult to keep GP numbers
up in outer urban & rural areas.

But overall we pay less than the US (I think it'a approx. 7.5%GDP)
and have a system that, nominally at least, covers all Australians.
Coverage of foreigners depends of bi-lateral govt agreements.
Some non-citizen permanent residents, and assorted groups on
temp. visas are explicitly not covered.

Oh, and to implement all this everyone (incl. children, ASAP after
birth) has a Medicare Number and
is (usually) required to present a Medicare Card at time of service.
So, I'm thinking maybe some in the USA might have a problem with it.

Posted by: Clively | Apr 24, 2005 1:12:10 PM

this is a good site

Posted by: emily | May 23, 2005 8:42:48 AM

Dear Sir or Madam,
We would like to know the tax procedure & type of taxes for Employer & Employee. Can you provide us the detail about

1.Name of the Government Bodies who are handling the all the payroll & Corporate taxes.

2.Taxes applicable for Employee & Employer.

Thanks

Regars
Santosh

Posted by: Santosh More | Jan 21, 2006 1:59:30 AM

In my view the health care system of a nation reflect its socio-economics and cultural standards.

I've read the article and I think that American health system could take a lot of good things from the Japanese one. In my opinion the first of them should be the lower prises especially in dental care. Dental insurances here for example offer very good help to people in need but they cost too much.

I'm a Californian transplanted to DC, and surprisingly at peace with it. Or at least I was till it started getting colder. Job-wise, I'm the staff writer for The American Prospect. In the past, I've written for the Washington Monthly, the LA Weekly, The LA Times, The New Republic, Slate, The New York Sun, and the Gadflyer. I'm a damn good cook. No, really. Want to know more? E-mail, I'm friendly.